Anti-China Riots in Vietnam Kill 2 as Workers Flee

Anti-China protesters march while shouting slogans during a rally in downtown Ho Chi Minh city on May 11, 2014. The U.S. Consulate-General in Ho Chi Minh City sent a statement to its citizens in the country warning about demonstrations “aimed at Chinese-affiliated companies and factories in and around Ho Chi Minh City and Binh Duong province.” Photographer: Le Quang Nhat/AFP/Getty Images

May 15 (Bloomberg) -- Anti-China protests escalated in
Vietnam as attacks on Taiwanese companies left two people dead
and at least 129 injured, while more foreign-owned factories
shut production and Chinese workers fled the country.

Vietnamese staff at a Taiwanese steel mill in Vung Ang in
the central province of Ha Tinh yesterday looted the site,
leaving 90 Chinese injured, and one Chinese person died of heat
stroke, mill owner Formosa Plastics Group said in a statement.
Taiwanese workers were not involved, it said.

A Chinese technician at Taiwan’s DDK Group, which makes
bike parts, choked to death as one of the company’s plants was
set on fire, Matthew Shih, a manager, said by telephone in
Taiwan. A Chinese employee is hospitalized in stable condition
after violence at DDK’s factories 30 kilometers (19 miles) north
of southern Ho Chi Minh City.

The attacks follow damage to factories in the southern
province of Binh Duong amid anger over a Chinese oil rig placed
in disputed waters near the Paracel Islands claimed by both
Vietnam and China. Vietnam and China fought a border war in
1979, with ties normalized in 1991.

With China, Singapore and Taiwan calling for Vietnam to
protect their citizens, Prime Minister Nguyen Tan Dung issued an
order for the violence to be brought under control as the
country seeks to preserve its status as a home for foreign
companies producing clothes, shoes and furniture. While
Vietnam’s leaders have condemned China’s actions over the rig,
large-scale anti-China protests in the country risk an
investment backlash.

‘Stop the Violence’

“Vietnam’s appeal as a destination for foreign direct
investment, as a stable location for manufacturing has certainly
taken a large beating,” said Wai Ho Leong, a Singapore-based
economist at Barclays Plc. “The worst thing that can happen to
a strategic investor is sporadic unrest popping up at critical
junctures, disrupting supply chains, in a world where margins
are already under pressure.”

Dung instructed provincial governments and security forces
to take “quick actions” to stop the violence, the government
said in a statement on its website. The Ministry of Public
Security increased forces in the southern province of Binh
Duong, where protests broke out at factory parks on May 13, and
the situation has stabilized, it said in a separate posting.

In Ha Tinh, about 128 people were admitted to hospital,
according to Tran Thai Son, the deputy head of the health
department in the province. “People who got injured during the
riot in Vung Ang area were hospitalized yesterday, including
some Chinese,” Son said by phone.

Hundreds Detained

The riot was tied to a fight between two groups of workers
and order has been restored, Vietnam foreign ministry spokesman
Le Hai Binh said at a Hanoi briefing. Provincial police detained
76 protesters after the riot, while almost 500 people were
detained for questioning over damage to property in Binh Duong,
according to local officials.

“People overreacted, broke the law and destroyed
properties of companies including foreign-invested firms,
causing public disorder, affecting businesses and people’s
lives, and harming the country’s investment environment and
government’s external policies,” Dung said, according to the
statement. “This situation is serious.”

China said Vietnam’s government had connived with those
behind the protest, demanding it punish perpetrators and do more
to protect Chinese citizens and property.

“What happened in recent days targeting Chinese businesses
and personnel -- the vandalism, smashing, looting and burning --
are directly related to the Vietnamese government’s indulgence
and connivance toward domestic anti-China forces and
criminals,” Foreign Ministry spokeswoman Hua Chunying said
today at a briefing in Beijing.

‘Fine Line’

Authorities in Vietnam had permitted peaceful
demonstrations against the rig to be held in major cities
starting last weekend. Those protests morphed into attacks on
businesses even if they had no direct link to China, reflecting
the resentment that remains from the war decades ago.

The violence was not “what the authorities wanted, or
foresaw,” said Martin Stuart-Fox, an emeritus history professor
at the University of Queensland in Brisbane. “The Vietnamese
authorities walk a fine line when they permit anti-Chinese
demonstrations,” Stuart-Fox said by e-mail.

China, which has deployed more vessels and aircraft to the
oil rig area in the South China Sea, continues to use water
cannons against Vietnamese vessels, causing damage to ships and
hurting crew members, Binh said. Vietnam will take all necessary
measures to protest the rig, he said.

Taiwan Factories

Protesters set fire to the buildings of 10 Taiwanese
companies as of yesterday, according to Taiwan’s Ministry of
Economic Affairs, with more than 100 companies invaded. Hundreds
of Taiwanese companies stopped production on safety concerns,
the ministry said in a statement.

Li & Fung Ltd., the world’s biggest supplier of clothes and
toys to retailers such as Wal-Mart Stores Inc., said most of its
supplier factories in Vietnam were closed. The company expects a
week-long delay in production, chief executive officer Bruce
Rockowitz said in Hong Kong today after a shareholder meeting.
Vietnam’s VN Index fell 1 percent today.

Four Taiwanese airlines, plus Vietnam Airlines, provided a
combined 3,307 seats to fly people to Taiwan today, with a
further 2,754 seats tomorrow, Taiwan’s Civil Aeronautics
Administration said in an e-mailed statement. China Airlines
will put on two extra flights today, it said.

Thousands Leaving

“Thousands are leaving,” said Chen Bor-show, director
general of the Taipei Economic and Culture Office in Ho Chi Minh
City. “They are waiting at the airport, waiting to take off,”
he said by phone. More than 600 Chinese business people and
tourists crossed the Vietnamese border into Cambodia yesterday
to escape the violence, the official Xinhua News Agency
reported, citing the Cambodian police.

Taiwanese companies have invested in Vietnam in part to
avoid being too reliant on China, according to Shelley Rigger, a
professor of political science at Davidson College in North
Carolina.

“They wanted to diversify,” she said. “In a way
Vietnam’s gain has been China’s loss. For Taiwanese investors to
be punished for making that move is kind of shocking.”